A charity that was unable to account for almost £150,000 of spending has been wound up by the regulator.
A Charity Commission inquiry report into Believe in Magic, which was registered in 2012 with objects of relieving the needs of children and young people suffering from serious illnesses, says the regulator began looking into the charity because of concerns about potential private benefit by trustees or connected parties and the late filing of its accounts.
The commission opened a statutory inquiry into the charity in February 2017 after it arranged to visit the charity but none of the four trustees made themselves available to attend the meeting.
The inquiry found that between December 2015 and May 2016, more than £108,000 had been electronically transferred to accounts in the name of a trustee and there had been cash withdrawals totalling £133,000 during the financial year ending 4 November 2015 and £156,000 in the following 12 months.
The inquiry report says the trustees told the regulator they needed to use cash because the charity had not been able to obtain a debit card for the type of bank account it held.
They said that because cash payments were not always accepted, they sometimes needed to pay funds into personal accounts so the bank cards on those accounts could be used for charity business, according to the commission.
The regulator asked the trustees to provide receipts to justify a sample of the withdrawals and electronic payments.
The trustees provided receipts and information that revealed “considerable spending within the objects of the charity”, the regulator said, but the receipts provided only supported £234,042 of the £381,838 sample they had been asked about – leaving £147,796 unaccounted for.
The regulator found trustees, who are not named in the report, had mixed charity funds with personal funds and poor record keeping in this area made it “impossible to establish whether all of the cash withdrawn and/or transferred had been used within the charity’s objects”, according to the report.
The commission concluded that the four trustees, one of whom died during the inquiry, had been responsible for misconduct and/or mismanagement.
Two that did not co-operate with the regulator were removed as trustees and another signed an undertaking in April not to be a trustee and/or hold an office or employment with a senior management function in any charity in England and Wales for a period of five years.
The report says the unexplained expenditure was referred to police, who carried out a criminal investigation but were unable to find sufficient evidence to take any further action.
The regulator also considered pursuing the lost funds on behalf of the charity but “after assessing the strengths of a claim and the economic prospects of recovery, it was not considered appropriate to proceed”.
It concluded the charity was no longer operating and ordered it to be wound up. It was removed from the register of charities in August.